Published: Wed, May 02, 2018
Business | By Pearl Harrison

Despite Higher Profits, BP Disappoints With Q1 Cash Flow

Despite Higher Profits, BP Disappoints With Q1 Cash Flow

BP's Chief Financial Officer Brian Gilvary said factors that reduced first-quarter cash flow - increases in working capital and payments related to the oil spill from the Macondo well in the Gulf of Mexico - would fade later in the year.

"We have delivered another strong set of results", said Bob Dudley, BP chief executive.

BP's underlying replacement cost profit, its definition of net income, rose 71 percent to $2.6 billion in the first quarter, exceeding the $2.2 billion forecast by analysts in a company-provided survey.

In late morning trading, BP shares in London were 0.8% higher at 542.4p. Its recent history has been dominated by the...

The stock has been recovering after crashing in the wake of the Deepwater Horizon blast eight years ago, which killed 11 workers and sparked the biggest oil spill in USA history.


Underlying profits were also up, with BP posting an underlying recurring cost profit of almost $2.6 billion, up from $1.5 billion a year earlier. The company paid out $1.6 billion on a pretax basis for the Deepwater Horizon disaster, including a final $1.2 billion payment to the U.S. Department of Justice.

BP's energy production increased 9 percent to the equivalent of 2.6 million barrels of oil a day.

United Kingdom supermajor BP posted a rise in profits during the first three months of 2018 as the upstream segment posted its strongest quarter since 2014.

Russ Mould, investment director at AJ Bell, said: "The main negative in the numbers is cash flow performance which was dampened by continuing payments linked to the 2010 Gulf of Mexico oil spill, leading to higher debt". Exxon Mobil Corp., Chevron Corp. and Royal Dutch Shell PLC posted their best first-quarter profits in years, but investors remained skeptical of companies that failed to meet expectations during three months when oil prices reached their highest level since 2014. The last time it reported profits of that size was in the third quarter of 2014 when oil prices were hovering near $100 a barrel.

BP profits soared to $2.6bn (£1.9bn), a 71 per cent boost from the same period previous year when it stood at $1.5bn. Payments are expected to be just over $3 billion in 2018, weighted to the first half of the year. It is still paying on it, and it will continue to pay for several more years, but as oil prices improve so has BP's outlook for the future. Net debt at the end of March was $40 billion, up from $37.8 billion at the end of 2017.

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